If local shopkeepers will provide authentic items at cheap price, there is no fear for them. Albeit the decision will bring happiness for customers, as it will increase competition and provide cheap food. This move will also help in decreasing inflation. As food prices are rising, by directly taking raw items from farmers, the middleman cost will be reduced, and end user will take some relaxed air. Also this will bring long term foreign investment which we need to boost our economy. I don't see anyone harming from this, even this will create jobs for lot of youth, which again help in improving our GDP. All this drama is just political, they created a fuss against government to gain some additional votes. Indian market is already mature enough to fight with foreign retail players and to give them head on competition.

One beneficiary of this move is without doubt - China. All the big retailers in their drive to find the cheapest sources have become super-efficient outlets for China's business juggernaut and this one will be no different. The small retail stores cannot afford to import directly out of China due to low volumes, Walmart and their ilk will have no such handicap.

I remember reading somewhere that average body weight in India was not increasing along with GDP as it does in most other developing countries. That is, Indians remain underweight compared to the rest of the world despite improving finances (sorry, can't find where I read it now). I wonder if inefficiencies in the grocery store sector could have something to do with this. That is, despite having more money, some people are still priced out of getting adequate food because so much is wasted. I suppose looking at inflation rates on food would support or invalidate this theory...

Just like in the case of China made telecom gears that benefited gear makers in China, and all the while, saved billions upon billions of dollars (by forcing multinationals to drastically cut bidding prices) for the ubiquitous proliferation of wireless mobile telecom in India, now with number of mobile subscribers perhaps second only to China.

The United States has at least 50% more retail space than it needs ... maybe it would be optimal to use tenth of that space ... except that the United States has already made a giant economic mistake by developing real estate in a manner that condemned people to using automobiles.

Driving a vehicle to a large parking lot to hunt for merchandise, then pushing a cart up and down a shopping aisle is an incredibly stupid and wasteful exercise given the advances in smartphone internet access, logistics systems, content delivered from the cloud [partly to provide extra data for shopping comparisons], social media and social commerce.

There is no reason that small, independent providers cannot add value by providing logistics and shopping services ... those independent providers could plug into a larger networks services ... in the same way that Amazon merchants, content providers and app providers plug into the Amazon infrastructure. There's plenty of room for a value-adding middleman and logistics provider ... particularly if people can check prices online and decide for themselves if they want to go fetch merchandise from a logistics depot.

Liberalisation should lower food prices by cutting out middle men and waste. Perhaps a third of crops rot on roadsides and in warehouses before anyone has a chance to smother them in spices and wolf them with chapatis.

This is open to question. Middlemen serve a purpose and the operations that they perform carry a cost. I think that these retail chains will actually spend more on these operations and force the producers to foot the bill.

Reliance’s venture into running supermarkets is a very sorry picture as anyone who visits one of their stores can see. Bad hygiene and bad smelling meat stalls are common in them.

India may have to come up with her own model of the supermarket…

The claim that a third of crops rot on roadsides and in warehouses is also one that has to be scrutinized. What happens to these rotting crops? Are they simply thrown away on the streets? Do they form the fodder for animals? Are they used in the making of compost? What happens when these rotting vegetables are not available or when they are disposed of in other ways?

As mentioned in the article, finding sizeable plots of land in close proximity to customers will be a big challenge, particularly in some cities.

This reality is not limited to Indian cities alone - this is also a challenge in places like New York, London and Paris. Therefore, one gets to see smaller retail outlets in these places: both branded ones such as Seven Eleven or Carrefour Express, and several non branded ones typically owner by immigrant families.

The proposition of these outlets are not just limited to low prices - their proposition includes proximity to customers, opening till late/ in early hours, selling freshly made food and beverages which time constrained urbanites pick up as breakfast, etc.

I think traditional Indian Kinara stores will be forced to alter their value propositions, which largely they should be able to do so if western examples are to go by.

It is diffrent in China,Walmart's prices are often higher than many retailers,especially local retailers.Kicking out middlemen only means incresing the profits for supermarkets,not cheaper products for customers.But in the west,such as in US,Walmart's prices are often the cheapest.

No all the foreign retailers are good,for example,Carrefour is notorious in selling fake products and out-of-date foods and tax evasion etc. in China.

The policy to allow 51% FDI in retail has its fair share of opposition. The opposition comes from the usual suspects and along expected lines. The communists oppose as they do anything that has even the most remote US connection. Several regional parties (with the exception of the Akali Dal in Punjab), mostly allies of the ruling UPA alliance, opposed. So did the BJP, which is the main opposition party.

Fundamentally, the opposition is that allowing FDI in retail would result in local small stores (known as kiranas) being driven out of business and their owners (kiranawalas) will be driven out of jobs and livelihood.

The assumption here is that Walmart and others would move their model lock, stock and barrel. It is simply not possible for that model to be applied in the Indian context.

The typical large Walmart store is just not going to come up in Indian cities due to sheer space constraints or due to the cost of land and construction. The chances, that a large store, which will suck all the kirana stores in its vicinity out of business, is hypothetical.

Indian shoppers are used to pick their phone and dial their kirana store for their regular fix of thepla, dhokla, bhakarwadi et al (Indian snacks). There will still be housewives from Lajpat Nagar colony in Delhi, who will lower a basket using rope from the second or third floor and have it filled with their choice of vegetables from the local vendor. Consumer habits are so entrenched, that not everyone is going to queue up if and when a Walmart store opens in Lajpat Nagar.

There is enough room for both supermarkets and local stores to co-exist.

I agree with you Mitesh, this is more of a political drama and in the end Walmart and their likes will bring in more reforms to build better infrastructure for easy transportation. Consistency in pricing is also another perk. Local businesses may be impacted, but for those who rely on ordering groceries / supplies home (like my mom does) the behavior will not change.

What kind of Economist article is this? "....smother them in spices and wolf them with chapatis". What a great economic analysis in such an august magazine. Expected better editorial job from Economist.

I leave office for home by 7 in the evening in my bike and in my eagerness to see my two year old son, I prefer to buy groceries/vegetables from a small format store of Aditya Birla- there you get everything in one place, you do not have to go to one store for milk, another for vegetables, a third for bakery. Also at the Birla store, you can pay with a credit card and need not worry about coins.

But last month I bought a car and this month I went to Kishore Biyani's Big Bazaar and bought a month's supply of groceries as it was easy to carry it home in my new car. Also, my son liked the childrens' play area very much. Earlier my bike permitted me carry only about 4 kg of groceries per trip.

So the way forward is big retail chains and the kirana stores role would be marginal going forward. And retail chains offer you cheaper and better quality products.

Yes it will reduce inflation but what about jobs? Both kirana shops and marginal farmers will be the losers. MNC retailers will enter into large scale contract farming with mechanisation displacing labour.But new jobs created will be lower than earlier jobs lost.

The quality of goods and foodstuff that is sold in these supermarkets like walmart and tesco are of generally bad quality. The prices there are dirt cheap.

So cheap that it is hard to believe that it will have any benefit to the Indian consumers who are used to buying high quality stuff directly from the vendors like fresh fruits and vegetables.

But then if you believe the Economist's articles about this issue then these superstores have some magic wand and that will solve all the problems in india. Where is the magic wand?

Who is going to benefit in the end? The indian consumers or the shareholders of the walmart company? I think the indian consumers by getting access to poor quality stuff and yes they are are going to be cheap only for a moment before the walmart starts milking the consumers.

As a outsider, I think we should look at this thing in different perspectives and evaluate their efects respectively. Introducing foreign companies will definitely have impact on local retailers and reduce their turnover. At the same time, however, it also create much more jobs for local people. And due to the competition , people who want to survive in corporate world will produce better products and service. In this way , lifes of lacal people will be improved.

Many Indians are of the view that supermarkets are preferable because they believe that those stores will not offer adulterated foodstuffs for sale,will pay taxes to the Government as they may not be able to keep taxes to themselves, and the quality of goods there will be much better. There is, however, a concern also in the mind of general public that a large number of local businessmen and self-employed persons may lose their source of livelihood and this may contribute to increasing poverty of the country. In short, this issue of FDI in retail is a very complex one. It may become a simple issue if the retailers can assure the public that they will not sell adulterated foodstuffs will and that the taxes realized from the purchaser shall be paid to the Government.

In today's world, you fail to realize that there are still places in the world like this. I did not realize that the food and money situation was this bad in India. I dont really understand how people can be starving over there when there is food rotting. It seems like the food would be sold for the cheapest price possible that the people of india could afford so that produce would not go to waste. It is still better to get really little money for an item than to get nothing at all and have it become unsellable. India has their priorities messied up if they will spend so much money on highlights but yet are hungry.

Is it really wise that at this point in time in the global economy that organized retail is developed in India? Through doing this, many small business owners will be shut out of business, jobless, and forced to work for Walmart/Ikea/etc. These small business shopkeepers must realize the effects that this could cause if they do not make rid of the middle man and create a logistics network; this is about the only way they can save themselves at this point.